Adelphia board to withhold founder's, CEO severance

PHILADELPHIA -- Bankrupt Adelphia Communications Corp. won't make $4.2 million in payments to John J. Rigas under a severance agreement reached when the company founder and former chairman stepped down in May, according to a person briefed on the sit

BILL BERGSTROM

Published
12:00 am EDT, Thursday, September 12, 2002

No payments had been made yet under the arrangement, said the person, who agreed to speak on the condition of anonymity.

Adelphia officials decided not to make the payments in late July, about the time the company sued Rigas and family members, the person said. The lawsuit accused the Riagases of using company funds for their own benefit and seeking billions of dollars in damages.

"It's more than disturbing when anyone, including a corporate board, would breach a contract presumably signed in good faith," said Peter Fleming, an attorney for Rigas, reading from a statement.

Eric Andrus, a spokesman for Adelphia, said the company wouldn't comment.

The nation's sixth-largest cable television company outlined the severance package in a May filing with the Securities and Exchange Commission.

Adelphia said that in connection with Rigas' resignation May 15 as chief executive officer and president, the company agreed to pay him $1.4 million a year in cash for three years. The severance package also included lifetime health care coverage for Rigas and his wife; use of an office, computer, telephone and secretary; and emergency use of company planes, the SEC filing said.

"The company doesn't anticipate making those payments," the person said Wednesday. The board hadn't made decisions about other portions of the package but may reconsider those as well, the person said.

Adelphia, which is based in Coudersport in rural northern Pennsylvania, filed for Chapter 11 bankruptcy protection June 25.

Rigas, the 77-year-old founder, was arrested July 24 along with sons Timothy, 46, and Michael 48, on charges of stealing hundreds of millions of dollars from the company. All the Rigases had stepped down from executive posts and seats on the company board in May.

The Rigases, who have denied any wrongdoing, are free on $10 million bail each, secured by cash, land and other property.

The company filed a civil complaint in the U.S. Bankruptcy Court in New York the day the Rigases were arrested, accusing them of conspiring to use company funds for their own benefit. The lawsuit alleged that off-the-books transactions and self-dealing by the Rigas family resulted in damages and loss in market capitalization of more than $1 billion, for which the company sought triple damages.